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May 26, 2010

Ruminations About Law and School (Part 2)

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Last week, I wrote over 1200 words (I swear I can't piss without dropping a thousand words of gibberish) on a decidedly banal topic—constitutional law. More specifically, I described a few absurdities that have long plagued the Constitution and could easily be fixed. Two finals deep, and with my last final of law school looming, I thought it would be appropriate tonight to author the companion piece to last week's rumination: shit that's wrong with statutory law that could easily be fixed. (I promise, dear readers, that this will be my last foray into substantive legal topics for a long time. Existential angst and despair will return in short order.)

The Internal Revenue Code—All of It

Any discussion about shit that's wrong with statutory law has to begin (but by no means end) with tax law, or more specifically, everyone's beloved Internal Revenue Code (IRC to its friends, such as they are). As anyone who has ever had the grotesque misfortune of sorting through its byzantine provisions can attest to, shit got fucked up in this area a long, long time ago. Maybe right around the time the Sixteenth Amendment was ratified. To even attempt to understand it, you have to hate yourself so much it hurts. (Maybe that's why I actually enjoy it—because I do hate myself so much it hurts.) And let's not even get started on the Treasury Regulations promulgated thereunder. As I observed on Twitter last week, § 1.704-1(b)(2)(iv)(f)(5)(ii)? Are you kidding me? Get the hell out of here!

But this post isn't just about shit that's fucked up in law; it's about shit that's fucked up in law that can easily be fixed. And that necessarily leaves out the IRC, because although it is profoundly fucked up, it's not like there are a lot of good ideas out there for fixing it. Even the most radical—scrap it and start over—probably wouldn't work. Replace it with what exactly? In the mean time, it would simply fuck shit up even more than it already is today. And don't even start with your bullshit flat tax nonsense, assholes; tell me first how we ought to define income and then talk to me about the rates at which you wish to tax it.

The Bankruptcy Code—Assumption and Assignment

Like the tax code, the Bankruptcy Code (Title 11) is also a pretty big mess. But unlike the tax code, I can actually point to a specific absurdity that could be remedied if Congress ever got its act together (which, of course, it won't). It's hard to get at the absurdity here since it is rather technical, but let me try (unsuccessfully, no doubt): under § 365(a), the trustee (i.e., the dude who administers the bankruptcy for the debtor) is allowed to assume, or take on for the debtor an outstanding contract, at her discretion. But under § 365(c)(1), any contract that could not be assigned to a third party cannot be assumed by trustee. This creates a weird situation in which the trustee may want to assume a contract for the debtor (not a third party!), but if that contract could not in theory be assigned, then the debtor himself cannot take it on.

This absurdity, moreover, has some really shitty real world implications. A lot of contracts cannot be assigned to third parties; patent licenses are an example. And going into bankruptcy as a beneficiary of patent licenses and then not being able to assume those licenses in bankruptcy can be serious bad news. More importantly, it's likely not the intended result, only some sort of catastrophic drafting error.

So, why won't Congress fix this? Laziness? Ineptitude? Inertia? No, the likely answer is even worse: capture. Obviously, some people benefit from this clusterfuck, and would prefer it not change. And as long as those clowns continue to spend on their esteemed Representatives, nothing will change. Which is really too bad, because a lot of time and energy is spent on attempting to make sense of this nonsense, and it could certainly be better spent elsewhere—like on trying to make sense of the tax code.

Article 9 and the Debtor's Name

A final easily remedied mess is found in Article 9 of the Uniform Commercial Code (UCC) (dealing with secured lending), which unlike its brethren in the tax and bankruptcy world, is actually a pretty well-drafted statute. (A lot of good can come when you drop the loathsome unwashed masses from your purview—new Article 9 by and large does not cover consumer transactions.) But despite it's general sensible nature, Article 9 creates a mess in at least one place that is infuriating: the entire damn thing is keyed on the debtor's name. Seriously??

Guess no computer scientists were in the room when they decided on that, huh? I think the first thing they might have told us in database theory was that names make awful, awful primary keys. Names, like people, are not beautiful and unique snowflakes; numbers, on the other hand, are (which is why I like them more than people). And instead of having millions in secured lending lost because someone filed a statement under XYZ Co. instead of XYZ Co., Inc., wouldn't it just be easier to use a damn number? And you know what would be a pretty good one to use? Taxpayer identification number! Everyone's already got one, so there is no new number to come up with, and more importantly, it is unique—voilà! Collision problem solved! Millions of dollars saved! Tons of lawsuits ended! What's not to love?

This one really shouldn't be too bad to fix. So, how about it, guys? Maybe a little modification to § 9-503? Please?

* * *

All right, enough ranting and raving for me. I still have one more final to prepare for and it would probably be best if I stopped wasting your time and more importantly mine. And like I said earlier, there will be no more substantive discussion from me for a long while. Liminal despair, here we come!


The flat tax shall rule the world!


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